NB: This question requires a (very modest) amount of reading ahead in the early sections of Core Unit 14. Which of the following statements are correct? The multiplier is: Select one or more: O a. the ratio of the money supply to nominal expenditure O b. the ratio of the total increase in GDP to an initial increase in exogenous spending (e.g. investment or government spending, if these are assumed not to depend on GDP) OC. the ratio of an increase in consumer spending to an increase in GDP O d. the ratio of government debt to income

NB: This question requires a (very modest) amount of reading ahead in the early sections of Core Unit 14. Which of the following statements are correct? The multiplier is: Select one or more: O a. the ratio of the money supply to nominal expenditure O b. the ratio of the total increase in GDP to an initial increase in exogenous spending (e.g. investment or government spending, if these are assumed not to depend on GDP) OC. the ratio of an increase in consumer spending to an increase in GDP O d. the ratio of government debt to income

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 8DQ

See similar textbooks

Similar questions

Question: How can there be "Autonomous Spending" even when a person has zero income? O a) All of the above are correct. b) People need to consume at least a minimum to stay alive. UO People need a certain level of consumption even if they do not have income. O d) People spend money from their savings, borrowing or from unemployment or pension pay.
QUESTION 6 Potential GDP Aggregate expenditure AE, 45° Y. Real GDP (Y) When real GDP is greater than Yo in the diagram above: O A. - inventories will decrease OB. ·Aggregate expenditure will be less than Real GDP OC. Aggregate expenditure will be equal to Real GDP OD. O D. inventories will increase QUESTION 7 Y G Xn $1,000 $1,400 1,400 1,400 1,400 1,400 $0 $800 -$200 2,500 5,000 7,500 10,000 2,300 3,800 5,300 6,800 1,000 1,000 1,000 1,000 -200 -200 -200 -200 Suppose you are given the data in the table above for a hypothetical economy. All data are in billions of dollars. Yis actual real GDP, and C, Ip, G, and Xn are the consumption, planned investment, government purchases, and net exports components of aggregate expenditures, respectively. Calculate the equilibrium GDP (give your answer in billions of $) Aggregate Expenditure
v Question Completion Status: A Moving to another question will save this response. Quèstion 4 Assume the economy's consumption and saving schedules simultaneously shift downward. This must be the result of: O A. The expectation of a recession O B. An increase in household wealth. O C. An increase in personal taxes. O D. An increase in disposable income. Moving to another question will save this response. SHARP AQUOS
Suppose that one day your rich aunt unexpectedly gives you $10,000 to use as you like, no strings attached. A fraction of that gift will be consumed (the marginal propensity to consume, MPC) or saved (the marginal propensity to save, MPS). If you are like the "average American," you will save less than 5% of your $10,0002. The money you don't save is consumed and is spent on purchasing goods and services. So, whether you spend the increased income on food, entertainment, paying off loans, or a new bicycle, that money goes back into the economy, where it generates revenue through taxes, and gets spent again. This is because an injection of extra income leads to more spending, which creates more income, and so on. In this way, your money is actually spent many times and it has the effect of stimulating the economy through what is known as the multiplier effect. Gifts from rich aunts are not the only way to stimulate the economy. Governments occasionally provide an economic stimulus by…
hich theory of consumption best explains the consumption behavior of consumers of our economy? Question No: 02 [Marks: 10] If the State Bank started printing large quantities of Pakistani Rupees (Rs), what would happen to the number of Pakistani Rupees a dollar could buy? Why? Question No: 03 [Marks: 10] Deseribe the difference batuuean foreian diract investmet and foraion nortfolie invastment Who is mora likelu to
The closed economy of Sokovia has a GDP of 150 billion dollars and a marginal propensity to save of 02. In the closed economy of Madripoor the GDP is 160 billion dollars and the marginal propensity to save is 0 25 We can infer that 6. Select one answer: O It takes Sokovia an injection of 10 billion dollars to reach a GDP of 200 billion dollars O The multiplier in Madripoor is 6. O The multiplier in Sokovia is 4. O It takes Madripoor an injection of 12 billion dollars to reach a GDP of 200 billion dollars.
2. In macroeconomic theory, total or aggregate spending is denoted by A and total or aggregateproduction of income by Y. Which one of the following statements is incorrect? A When A is greater than Y, there is disequilibrium and Y will tend to increase.B When A is equal to Y, there is equilibrium and Y will remain unchanged.C When A is less than Y, there is disequilibrium and Y will decrease.D When A is greater than Y, there is disequilibrium and A will decrease.
Question 1) a) In panel (a) the curve shifts upward, what could cause this? O Increase in G (govermment spending)O Decrease in HH wealth due to a decrease in housing pricesO An increase in the overall price levelo Areduction in govemment spending (G) b) Using Figure 2, if this economy is currently at Y1 and consumer wealth increases, then___O AD1 will shift to the left, reflecting a decrease in the real GDP at every price level.O AD1 willshift to the right. reflecting an increase in the real GDP at every price level.O an upward movement along the AD1 wiltake place., reflecting an increase in the price level.O a downward movement along the AD1 will take place, reflecting a decrease in the price level.
Which of the following policies will NOT shift the Aggregate Expenditure curve upward? Select one: O a. increasing autonomous taxes O b. decreasing autonomous taxes O c. increasing autonomous transfer payments O d. increasing government expenditures on goods and services
All of the following are true when there is an unplanned decrease in inventories, except: O a. Actual investment is greater than planned investment O b. Real GDP will be rising O c. GDP is less than aggregate expenditures O d. Saving is less than planned investment
1. According to the Bureau of Economic Analysis, during therecession of 2007–2009, household saving as a fraction of dis-posable personal income increased from a low of just over1 percent in the first quarter of 2008 to 5 percent in the secondquarter of 2009. All else equal, what impact would this changein saving have on the MPC, MPS, and multiplier? How wouldthis change affect equilibrium output when planned invest-ment changes? 2. Assume in a simple economy that the level of saving is –500 whenaggregate output equals zero and that the marginal propensity tosave is 0.2. Derive the saving function and the consumption func-tion, and draw a graph showing these functions. At what level ofaggregate output does the consumption curve cross the 45° line?Explain your answer and show this on the graph.
Refer to the information provided in Figure below to answer the question that follow. AE2 AE, 2,000 700 400 45° 2,000 A Aggregate output ($ billions) Refer to Figure What is the value of Point B? Select one: a. $7,000 billion O b. cannot be determined from the given information O C. $3,500 billion Aggregate expenditures ($ billions)